1. Ukraine Real Estate
How to participate in Ukraine's burgeoning real-estate market
Main materials written November 2005
Many foreign visitors to Ukraine are well aware that Ukraine's real estate market has been developing
rapidly. Apartment prices in Kiev and other major cities of Ukraine have "gone through the roof" in the
past several years. Happy indeed are the investors who purchased real estate (apartments) in Ukrainian
cities in the early 90s for a few thousand dollars and have seen their property rise in value an average of
20-40% a year ever since. Add to that revenue from apartment rental and you have a very profitable
asset!
Many investors made their decision to enter the Ukrainian market after the Orange Revolution (Nov-
Dec. 2004), which demonstrated that the country has strong democratic and European leanings and will
likely continue moving in this direction. As you will see below, acquiring real estate in Ukraine is not
difficult at all.
Property appreciation patterns
Property appreciation began in the early 1990s after Ukraine's economy hit bottom and has been most
pronounced in Kiev, Odessa, Lviv, Dnepropetrovsk and other large cities. Soon afterwards prices in
resort areas of Crimea began climbing, and now real estate prices in Yalta are often even higher than in
Ukraine's capital Kiev. In the late 90s property values began rising in the Carpathian region and in other
desirable vacation areas around the country. There are very few places in Ukraine where no price action
has occured since the post-Soviet economic collapse, but in general property prices in villages and small
towns around Ukraine remain very low.
Property values show no sign of halting their growth, and real estate analysts generally agree that the
fundamental causes of the growth in prices in Ukrainian cities will continue to push up prices for several
more years at the least.
Read my special report on real estate in Crimea
Causes of Ukraine's real estate boom
Among the causes of the rise in price of real-estate in Ukraine are the following:
low levels of housing per capita in Soviet times
Soviet system kept people from moving to big cities, but now they are allowed to

2. opportunities and capital concentrated in big cities
rising income levels in cities and resort areas
lack of investment alternatives
mistrust of banks after losing life savings during the inflation and banking crisis of the early 1990s
increasing accessibility of bank loans and mortgages
This boom has occured in spite of very high interest rates. When these rates finally lower, demand for
real estate will likely rise further.
Documents needed for purchasing real estate in Ukraine
Any foreigner may purchase real estate in Ukraine regardless of residential status or visa type.
Foreigners may buy any real estate other than non-privatized property and agricultural lands, however,
almost all foreign investors are interested in residential real estate. Just a few documents are needed to
transfer residential property in Ukraine:
passport
Ukraine taxpayer identification code certificate; this can be obtained in Kiev (find out how to do this
here), or a representative (for example, uaproperty.com) can do this for you with your passport and a
power of attorney
if buyer is married and comes to Ukraine without his or her spouse: copy of marriage certificate, copy of
spouse's passport, and notarized copy of spouse's consent to buy property in Ukraine
Ukrainian property can be bought through some real estate agencies without the buyer's physical
presence. However, for obvious reasons almost all buyers of expensive property prefer to make the deal
in person.
Getting money into Ukraine to buy property. Opening a bank account
Up to $15,000 USD may be brought into Ukraine without special documents (until recently it was
$10,000). Most foreign property buyers open a bank account in Ukraine and transfer money from
abroad. Then money can either be transferred to the seller's bank account or taken out in cash. Opening
a bank account in Ukraine is easy and requires these documents:
passport
taxpayer code certificate
proof of foreign origin of money (if foreigner puts cash in account after opening); a custom's declaration
from entering Ukraine, a bank receipt from exchanging cash or travelers checks, or a bank receipt from
receiving cash with a credit or debit card

3. A good bank to open an account in is PrivatBank. In addition to an easy account opening procedure they
have and hundreds of branches across Ukraine and have a convenient Internet transfer system that
allows you to transfer money to your account online. Other banks are starting to catch up with
PrivatBank in online banking, too.
Costs incurred while acquiring Ukrainian real estate
When buying real estate a 1% tax is paid on the sales amount and another 1% is paid to the Ukraine
Pension Fund. Buyers and sellers settle on who is to pay these fees and state this in the sales agreement.
Real estate agencies typically charge 3-5% of the property price for their services. Finally, buyers may
buy an insurance policy on the property for 1% from their real estate agency.
Real estate investors are closely watching politics and the upcoming 2006 parliamentary election in
Ukraine. There has been talk of implementing a property appreciation tax of 13% for residents and 26%
for nonresidents, effective at time of sale, which could significantly affect the market. This tax would be
paid on the difference between the price the property was originally acquired for and the price it was
sold for.
Real estate improvement and maintenance costs
In most cases foreign buyers immediately renovate their newly acquired residential property, typically
spending $10-15 thousand USD on repairs and construction. Some real estate agencies offer
construction overseeing services. uaproperty.com, for example, charges 6% of construction costs for
their services.
In order to build new structures on property acquired, all real estate owners must obtain a building
permit. Many locals and foreigners opt to pay building firms (usually around $500 or more) to do the
whole process for them — from drawing up architectural plans to standing in line in all the government
offices that put their stamps of approval on the plans.
Property maintenance costs in Ukraine are generally very low. Utilities usually amount to $15-30 per
month for an average apartment, and there are no property taxes (other than the tax paid when selling
real estate).
Foreign owners of real estate in Ukraine often install security systems, especially if they are not renting
out their property.
Property that is consistently rented out usually requires periodic repair, which may add up to 5-20% of
rent.
Renting out property in Ukraine

4. Typical rental prices in Ukrainian cities are usually 5-10% of the property value per year, or 0.8% per
month. In other words, an apartment that would currently sell for $40,000 USD would probably cost
$160-320 per month to rent (closer to the middle of this range would be most typical).
Many real estate agencies offer rental and property care services, allowing foreigners owners to not
have to worry about their property at all. Owners can agree to pick up rent from the agency periodically
or have the money deposited to their Ukrainian bank account.
Taxes on property rent
Money earned from renting out real estate is taxable in Ukraine. If owners are not Ukrainian tax
residents, they must pay 26% on earnings from real estate rental — twice the rate of 13% (flat tax on
income) for residents.
Owners of higher-end apartments or multiple properties may find it worthwhile to register as private
entrepreneurs and pay a fixed monthly tax instead of percentage-based income taxes on money earned
from rent. This standard tax of around $40 USD does not change for any level of income related to
entrepreneurial activities that amounts to less than 500 thousand UAH (nearly $100,000) per year.
Foreigners can also create a Ukrainian firm that will be a tax resident of Ukraine. This firm will pay
different kinds of taxes on earnings and, in addition, will be able to legally acquire non-privatized and
agricultural land which non-residents are not able to acquire by law. After land has been privatized and
developed, ownership may be transferred to the foreign owner through legal means.
Money that can be proved to having been legally earned in Ukraine may be transported or transferred
out of the country with the necessary documentation. However, most foreigners prefer to leave their
earnings in a Ukrainian bank and use it inside Ukraine.